My recent post suggested that we were seeing diminished strength in the U.S. stock market, but not distinct signs of weakness. Above we see three charts that update the view on market strength.
The top chart tracks the number of common stocks across all exchanges that have made three month new highs vs. lows. Typically this measure peaks ahead of price during bullish intermediate-term cycles. We can see that new highs have indeed peaked and, though we have been trading at or near price highs lately, the number of shares hitting fresh peaks has diminished. Still, we're not seeing net new lows as we did prior to peaks in April, July, and September. (Raw data from the Barchart site).
The middle chart follows the number of stocks listed on the NYSE that close above vs. below their upper and lower Bollinger Bands. This has tended to peak and trough ahead of price during the up and down phases of market cycles. Again, we've seen a peak in this measure, but as yet not the negative readings that preceded the July and September peaks. (Raw data from the Stock Charts site).
The bottom chart tracks the number of stocks listed on the NYSE that give buy vs. sell signals on the Commodity Channel Index (CCI) per the Stock Charts site. Once again we see a peak in buy signals, but not as yet an expansion of sell signals as we saw prior to the September peak.
In sum, we're seeing signs of waning upside momentum, but not yet a pickup in downside momentum. For that reason, I believe it's premature to assume that this market is on the verge of a correction on the order of August or October.
Further Reading: Will this Market Roll Over?